New Owners Corporations Regulations 2018 - Change is on the horizon

The existing Owners Corporations Regulations 2007 (Vic) will be replaced by the Owners Corporations Regulations 2018 (Vic) (“2018 Regulations”) with effect from 2 December 2018. Owners corporation managers and operators of strata titled retirement villages need to be aware of the key changes. More particularly:

Professional indemnity insurance

The amount of professional indemnity insurance that a manager of an owners corporation must hold to meet claims in any one year has risen from $1,500,000 to $2,000,000.

Maintenance plan

The maintenance plan for an owners corporation must include additional ‘major capital items’. Namely:

common property structures including the roof, stairways, balustrades and window frames;

common property services such as shared water, gas and sewerage pipes, pumps, drains, electrical and telephony infrastructure; and

common property assets such as fences, pools and water tanks.

All owners corporations should review their current maintenance plans to ensure that the new major capital items are adequately dealt with.

Absentee committee members

Absentee committee members will be dealt with under the 2018 Regulations by allowing the committee to pass a resolution to remove the member if the member is absent from 25% of committee meetings without explanation and within a 6 month period.

Model owners corporations rules

The model owners corporation rules will be modified by the 2018 Regulations, so that:

a committee may appoint members to a sub-committee without reference to the owners corporation;

a lot owner or occupier is now required to notify the owners corporation when undertaking any renovations or other works that may affect the common property and/or other lot owners’ or occupiers’ enjoyment of the common property; and

a lot owner or occupier is required to obtain approval from the owners corporation before making changes to the external appearance of their lot. The owners corporation cannot unreasonably withhold approval, but may give approval subject to reasonable conditions to protect the quiet enjoyment of other lot owners, structural integrity or the value of other lots and/or common property.

The new model rule concerning the external appearance of lots leaves open the question as to what constitutes “reasonable” grounds for withholding approval to external lot changes. Disputes on this point are certainly foreseeable.

Practical considerations

Owners corporation managers and retirement village operators should consider whether the model owners corporation rules will apply to their development, and if so, consider whether to introduce alternative rules regarding the external appearance of lots.

Operators of strata titled retirement villages may also wish to review existing residence and management contracts if a contractual right to withhold consent to external lot changes is desirable.